2020 Director’s Alert: Reimagining governance and oversight amid digital disruption
New Zealand, 10 February 2019 — The 2020 Director’s Alert, released by Deloitte, challenges boards to stretch their
imaginations. Digital and cognitive technologies, risk measurement and mitigation, and opportunity maximisation will all
require insight and creativity from boards who are often more accustomed to rational problem solving.
Traditionally, board members have not been expected to use their imaginations in their governance roles. Rather, boards
were required to bring sharp enquiry, sober judgement and sound advice to their oversight of organisational risks and
the executive team’s approach to managing them.
However, as technological advances such as artificial intelligence (AI), automation, and robotics change the business
landscape and 95 percent of board chairs cite disruption as an issue requiring attention in the near future[1], a case can be made for creativity.
“We know that technological advances in AI will impact on the culture of the businesses in New Zealand,” said Grant
Frear, partner at Deloitte New Zealand. “We also know that these technological advances bring risks and opportunities
that demand a focus on a business’s purpose, trust and reputation, combined with an open-minded consideration of risk
identification and management.”
Research by Deloitte[2] indicates that boards that actively engage with technology issues typically perform better financially. And, in a
survey of more than 500 executives across a range of industries, 58 percent of organisations had started to use robotic
process automation and AI at some level in 2019.
“With the increased use of AI, automation, and robotics in business, boards must step up and consider the associated
risks,” said Frear. “These risks must be identified, understood and actively monitored by the executive team under
oversight of the board.”
“Boards must consider the potential upsides like savings, alongside cultural factors and risks,” said Frear. “Boards
should be asking creative ‘What ifs?’ What if our competitors treble their processing speed? What if AI could do that
role? What if this impacts on our reputation with employees and customers?”
Risks to brand and reputation, and thus to revenue and shareholder value, are of particular concern to the board. These
risks can stem from seemingly small decisions about AI uses and applications, for example.
“Boards must employ their imaginations alongside their hard skills and have candid discussions about the implications
and monitoring needs of AI, automation and robotics,” said Frear. “They need to think beyond what is probable and extend
themselves and their businesses into what is possible.”
“The stakes are too high to take shortcuts and not consider the unintended consequences technology may have on
employees, customers, and society at large,” said Frear. “Boards must ensure their companies have the right culture in
place to meet, manage and take advantage of technological advancements in an ethical manner.”
ENDS